# Gift Certificates **URL:** \ **Category:** Factual Questions\ **Created:** [December 24, 2013, 2:32am UTC](https://boards.straightdope.com/t/gift-certificates/677055 "2013-12-24T02:32:52Z")\ **Posts on this page:** 10\ **Page:** 3
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [December 25, 2013, 3:02pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/41 "2013-12-25T15:02:57Z")
The OP started the “20% discount” idea with his example, though he admitted he was pulling numbers out of the air. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 25, 2013, 3:07pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/42 "2013-12-25T15:07:34Z")
> [@turtlescanfly](#): > > I know it was just tossed out as an example ($25 card sold for $20, a 20% discount) but FTR I used to work in a convenience store that sold a variety of gift cards. The BEST commission was 12%, but most ran in the 5-7% range. Thanks for the actual numbers. As you said, gift cards don’t spoil. But also I think they’re worthless until the customer has them activated at the register. So if someone shoplifts a gift card, they’re not getting anything. ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [December 25, 2013, 3:13pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/43 "2013-12-25T15:13:56Z")
Well, they do “spoil” in a way, once you factor in inflation. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 25, 2013, 3:58pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/44 "2013-12-25T15:58:47Z")
Not in the same way that fruit or bread spoils. And in my experience the gift cards in stores are not denominated until the customer chooses how much to put on them. In other words, generally the retailer doesn’t stock a $25 gift card for Olive Garden, but just a blank gift card for Olive Garden and the customer can decide how much value they want to put on it. ---
**Author:** ![turtlescanfly](https://avatars.discourse-cdn.com/v4/letter/t/65b543/32.png) [@turtlescanfly](https://boards.straightdope.com/u/turtlescanfly)\ **Post date:** [December 25, 2013, 4:57pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/45 "2013-12-25T16:57:06Z")
> [@Dewey\_Finn](#): > > Not in the same way that fruit or bread spoils. And in my experience the gift cards in stores are not denominated until the customer chooses how much to put on them. In other words, generally the retailer doesn’t stock a $25 gift card for Olive Garden, but just a blank gift card for Olive Garden and the customer can decide how much value they want to put on it. True, the cards have no value until they are purchased (well, they certainly cost something to produce, but surely its pennies). But most of the cards we sold were fixed denomination. The only ones we sold that were not were our own (but we sold fixed denominations of those also). Perhaps that means if you actually went to Olive Garden, you could buy a gift card in whatever denomination you’d like, but going somewhere else you are likely stuck with the fixed denomination. Not that that is a problem, they usually come in amounts you’d pick anyway ($25, $50). I would look cross-eyed at someone who gave me a gift card for $37.50 ---
**Author:** ![kaltkalt](https://avatars.discourse-cdn.com/v4/letter/k/bb73d2/32.png) [@kaltkalt](https://boards.straightdope.com/u/kaltkalt)\ **Post date:** [December 25, 2013, 8:07pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/46 "2013-12-25T20:07:50Z")
I can’t imagine there would be any commission on gift cards. However I can imagine that in order to sell them you have to pay some flat fee and/or subscribe to some gift card stocking service. I bet there are 3rd party companies that stock stores with gift cards from other companies and handle the transfers of money from the card sellers to the card issuers. They probably take a %. But other than a small profit from the float, no way do I see Target getting an actual commission from Olive Garden for selling an Olive Garden gift card. Not one percent, not half a percent. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 25, 2013, 8:29pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/47 "2013-12-25T20:29:38Z")
A few posts above yours, there is one from **turtlescanfly** , who worked at a convenience store and reported that the store received a commission of, typically, five to seven percent for selling gift cards. ---
**Author:** ![kaltkalt](https://avatars.discourse-cdn.com/v4/letter/k/bb73d2/32.png) [@kaltkalt](https://boards.straightdope.com/u/kaltkalt)\ **Post date:** [December 25, 2013, 10:02pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/48 "2013-12-25T22:02:39Z")
didn’t catch that. if it’s true then i stand corrected and am highly surprised. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [December 25, 2013, 10:10pm UTC](https://boards.straightdope.com/t/gift-certificates/677055/49 "2013-12-25T22:10:23Z")
> [@kaltkalt](#): > > I assumed the gift cards were put in the store for free - a product they can carry that they don’t have to pay for. When a customer buys one and activates it, the full value goes to Olive Garden or whoever issued the gift card. The store doesn’t make money, but it doesn’t lose money (it may even make interest on the money by keeping it for a week or whatever). And it gets an extra product to sell on its shelves to bring in customers. All else equal woudln’t you rather shop at the store that carries a good selection of gift certificates than one that doesn’t have any gift certificates? > > No way the issuer is losing 20% on every gift certificate, that’s not going to happen. Shelf space is valuable. Even if they didn’t pay a penny for the cards, they would be “losing” whatever profit they could have earned by stocking something else there. ---
**Author:** ![turtlescanfly](https://avatars.discourse-cdn.com/v4/letter/t/65b543/32.png) [@turtlescanfly](https://boards.straightdope.com/u/turtlescanfly)\ **Post date:** [December 26, 2013, 7:20am UTC](https://boards.straightdope.com/t/gift-certificates/677055/50 "2013-12-26T07:20:58Z")
> [@kaltkalt](#): > > didn’t catch that. if it’s true then i stand corrected and am highly surprised. It’s true, and not that surprising if you think about it. Take the example of Olive Garden, since it was used as an example. If Olive Garden only sells gift cards in their restaurants and nowhere else, they will sell some (X) number of cards (based on history). Everyone who has decided that it is worth going to the restaurant to make that purchase has done so (for a given time period). Now lets say Olive Garden makes it a lot easier to buy their card… you don’t have to come to their restaurant, you just have to go to the corner store, which you were probably going to do anyway. So it is reasonable that some additional number of cards (Y) will now be sold. Now, some people who would have bought cards at the restaurant will undoubtedly now buy them at a secondary retailer, but its a safe bet that the total number of cards sold will still be more than if Olive Garden only sold the cards directly. Now, Olive Garden has to give these secondary retailers something for their trouble. For the sake of easy math, lets say it is 20% (for every $25 card the retailer sells, they only have to turn over $20). So the restaurants total revenue is $25X + $20Y, which is more than just $25X as long as Y is a positive number. Oh, and one last thing that I didn’t see mentioned anywhere else. Markup on restaurant food is very high… to honor that $25 gift card, Olive Garden really only needs to shell out between $7-10 (less if its drinks), so even if they only received $20 in revenue from that card, they are still making money. In general economic terms, a goods producer should continue to produce goods as long as the marginal (additional) revenue from each good produced exceeds the marginal cost of producing that good. Olive Garden isn’t allowing other retailer to sell their cards to be nice. They do it because it makes them money. [Previous page](https://boards.straightdope.com/t/gift-certificates/677055.md?page=2)